Japan’s exports rebounded in July with the help of hefty fuel shipments to China ahead of the Olympics, but more recent data failed to dispel concerns that the world’s second-biggest economy is heading for a recession.
The spurt in demand for Japanese diesel reflected China’s build-up in fuel stockpiles for the Beijing Olympics and analysts said the buying spree that helped China overtake the United States as Japan’s top export market would soon be over.
Exports rose 8.1 per cent in July from a year earlier, topping a median market forecast for a 5.6 per cent rise. That followed a drop of 1.8 per cent in June from a year earlier, which was the first annual decline in nearly five years.
For months, firm demand from China and other emerging economies for Toyota cars, Panasonic electronics and other global brands as well as solid sales to Europe have cushioned the impact of slumping US sales.
But analysts said in the long run no region would escape the global slowdown sparked by the US credit crunch, and the better-than-expected figures did not change the view that the Japanese economy was losing steam.
“July’s rise in exports was a temporary thing,” said Takeshi Minami, chief economist at Norinchukin Research Institute.
“Given sluggish US and European economies, Japanese exports will remain weak, and you can’t expect much help from the Chinese economy either as it is expected to slow after the Olympics.”
Underlining Japan’s export problems, shipments to the United States — a key destination for Japanese goods — fell 11.5 per cent in July from a year earlier, marking the 11th straight month of annual declines, dragged down by a slump in auto shipments.
Shipments to the European Union rebounded, up 4.1 per cent from a year earlier after two straight months of falls, helped by auto exports, but that did little to alter the view that Europe-bound exports are weakening.
Exports to Asia, which account for roughly half of overall shipments, rose 12.7 per cent from a year earlier, while those to China jumped 16.8 per cent, but analysts were sceptical whether such rates could be sustained.
The economy contracted in the second quarter at its sharpest rate in seven years and the government has acknowledged that Japan is either heading into a recession or is already in one.
Adding to the gloom, the Bank of Japan delivered its bleakest assessment of the economy since the 1997/98 Asian financial crisis.
High oil prices, which hit record peaks in mid-July, inflated Japan’s import bill, cutting into corporate profits and further dampening economic activity.
“Imports are surging in value, which shows that high crude oil prices continue to hurt corporate revenues and are leading to an outflow of income from Japan,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute.
Japan’s imports in July jumped 18.2 per cent from a year earlier, more than expected, slashing the nation’s trade surplus by nearly 90 per cent from a year earlier to 91.1 billion yen ($830 million) surplus.